Comptroller says Albion school district taxes too much

By Tom Rivers, Editor Posted 12 July 2016 at 12:00 am

School leaders disagree, saying Albion needs reserves to cover possible reduction in state aid

ALBION – The state comptroller says Albion Central School taxes district residents too much. Albion has too much in the bank, according to a recent audit from the office of the state comptroller, Thomas DiNapoli.

Albion school leaders disagree with the assessment from the comptroller, which is merely an advisory opinion.

The school district hasn’t increased taxes in nine of the last 10 years. Albion wants money in reserves in guard against a cut in state aid, which happened during the state budget crisis in 2009 and 2010.

The district’s tax rate tax rate for 2015, at $17.37 per $1,000 of assessed property, is the lowest in Orleans County and about $7 less than Medina Central School, which has the highest rate at $24.38 in 2015.

However, the comptroller criticized Albion for not preparing accurate budgets from 2010-11 through 2015-16. The comptroller said the district’s annual $33 million budgets took in about $2 million more in taxes than was needed. That allowed Albion to accumulate a surplus of about $13 million.

The district’s budget is mostly funded with state aid. Local property taxes account for $8,355,939 of the budget.

Besides a surplus that is too big, the comptroller said Albion has a retirement contribution reserve and unemployment insurance reserve that are far too big. The retirement reserve was $7.8 million as of June 30, 2015, which was about 18 times the district’s annual average contribution of $422,000, according to the comptroller’s report.

The balance of the unemployment reserve was $244,000 on June 30, 2015, which was 22 times the district’s average annual unemployment costs of $11,000.

The state says school districts should keep fund balances at no more than 4 percent of the budget. Albion instead has a unrestricted fund balance of 8.5 percent, according to the comptroller, a “surplus” that grew because the district overestimates appropriations and underestimates revenues.

The comptroller also faulted Albion for putting money into a capital projects fund for building projects rather than financing the local share for those projects.

District residents approved a $14.3 million capital project in May 2015 that includes new roofs, and other facility upgrades. The state is paying most of the cost, with Albion’s local share at $1.3 million.

Albion uses surplus funds for the local share, by shifting money from the general fund to a capital projects fund, the comptroller said. Albion then uses that money to pay the local share for projects, rather than borrow that money.

The comptroller said the district is in effect “prepaying” for the cost. Albion could instead finance the local share and could get state building aid on it, while also reducing the annual tax levy. It would be a more transparent way to finance the project, according to the comptroller’s report.

Albion school officials have saved an estimated $4.6 million by not taking on debt and financing costs for recent capital projects, Michael Bonnewell, the school district superintendent, wrote in a May 23 response to Jeffrey D. Mazula, chief examine for the comptroller in Buffalo.

Bonnewell said Albion’s overall budget is 80 percent funded by state aid. “Our collective goal over the years has been to minimize the impact of inconsistency of funding levels from the State Education Department while trying to maintain an effective instructional program insulated from the swings in state aid revenues,” Bonnewell wrote.

The audit report was discussed during Monday’s Board of Education meeting.

“We’re going to stay focused on providing a good educational program while being good stewards of taxpayer money,” said Shawn Liddle, the district’s assistant superintendent of business.

Liddle also presented the board with a May 2008 report from the comptroller urging school districts to set aside money for “other post-employment benefits” for employees, including health care expenses.

“Governments should develop plans to address these costs, which can be managed through a combination of cost containment, cost sharing and funding set-asides,” according to the May 2008 report from the comptroller, who was also DiNapoli in 2008.

Board of Education member David Sidari said Albion is the envy of many school districts for the way it has built up reserves and avoided increasing taxes.

“The auditor complements year after year,” Sidari said.

To see the comptroller’s report on Albion Central School, click here.